ESG backlash

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In what is a reminder that potential liabilities based on alleged ESG-related overstatements remains a significant corporate risk, DWS, the asset management arm of Deutsche Bank has agreed to pay a €25 million fine to settle greenwashing allegations related to its ESG-focused investment products. The fine, imposed by the Frankfurt Public Prosecutor’s Office, follows an earlier $19 million SEC fine the firm agreed in 2023 to pay based on similar charges. The firm’s April 2, 2025, statement about the Frankfurt Public Prosecutor’s Office fine can be found here.Continue Reading Deutsche Bank Asset Management Unit Pays €25m Greenwashing Fine

Early in the New Year, McDonald’s announced that as a result of an outside law firm audit it would be  ending some of its diversity practices, citing as the reason the U.S. Supreme Court’s 2023 decision outlawing affirmative action in college admissions. Notwithstanding this corporate action, just a few days later McDonald’s was hit with a civil rights lawsuit filed by a conservative activist alleging that a Hispanic scholarship program the company sponsors is discriminatory based on race. As discussed below, this new lawsuit is just the latest anti-ESG lawsuit conservative activists have filed based on DEI-related and other issues. A copy of the January 12, 2025, complaint in the new McDonald’s lawsuit can be found here.Continue Reading McDonald’s Sued in ESG-Backlash Lawsuit over Hispanic Scholarships

The directors’ and officers’ liability environment is always changing, but 2024 was a particularly eventful year, with important consequences for the D&O insurance marketplace. The past year’s many developments also have significant implications for what may lie ahead in 2025 – and possibly for years to come.  I have set out below the Top Ten D&O Stories of 2024, with a focus on future implications. Please note that on Wednesday, January 15, 2025 at 11:00 AM EST, my colleagues Marissa Streckfus, Chris Bertola, and I will be conducting a free, hour-long webinar in which we will discuss The Top Ten D&O Stories of 2024. Registration for the webinar can be found here. I hope you can join us for the webinar.Continue Reading The Top Ten D&O Stories of 2024

As I have documented on this site, conservative advocacy and legal groups have been pursuing an aggressive ESG backlash campaign. Among other things, these groups’ efforts have caused several high-profile companies to walk back their DEI initiatives. These groups have also pushed for state-level anti-ESG legislation and have also even pursued anti-ESG litigation. The litigation results have been mixed at best, as noted for example here. However, in the ESG-backlash securities lawsuit filed by a conservative advocacy group against Target in the wake of a consumer boycott following the company’s LGBT “Pride Month” campaign, a federal district court has denied the defendants’ motion to dismiss. As discussed below, there are several interesting features of the court’s ruling. A copy of the Court’s December 4, 2024, opinion can be found here.Continue Reading ESG Backlash Securities Suit Against Target Survives Dismissal Motion

There is no doubt that ESG both as a concept and as a social, political, and litigation phenomenon has changed over time. Due to political backlash and changing investor priorities, ESG and ESG-related issues recently have featured less prominently in general economic and business dialog than even just a short time ago. An interesting and thought-provoking May 2, 2024, article (here) from the Rock Center for Corporate Governance asks the question whether the circumstances surrounding ESG are changing because ESG “is a luxury good”? (Hat Tip to Cydney Posner’s May 13, 2024, post on the Cooley law firm PubCo blog, here). The article raises some interesting questions and reflects interesting data and observations.Continue Reading Is ESG a “Luxury Good”?

I have noted in prior posts on this site the phenomenon of ESG backlash, which has not only taken the form of legislative and other overtly pollical action, but has also taken the form of litigation as well. Though the ESG backlash lawsuits generally have not fared well in the courts, one of these suits recently survived a motion to dismiss.

In a February 21, 2024, ruling, the Northern District of Texas denied the motion to dismiss in a lawsuit filed by an American Airlines pilot alleging that the airline and its employee benefits committee violated their fiduciary duties under ERISA to the company’s 401(k) plan participants in connection with selection and retention of funds whose managers allegedly pursue non-economic ESG objectives rather than maximizing plan participants’ financial benefits. As discussed below, the ruling underscores just how fraught the ESG-related litigation picture has become. A copy of the court’s ruling can be found here.Continue Reading ESG Backlash ERISA Lawsuit Survives Dismissal Motion

As I have noted in recent posts on this site, the developing trend toward anti-ESG litigation has targeted, among other corporate initiatives, company adoption of diversity, equity and inclusion (DEI) programs. These and other developments have encouraged some companies to soft-pedal their initiatives in this and other areas, a phenomenon that has been described as “greenhushing.” But as noted in a recent memo from attorneys at the Wachtel Lipton law firm, while scrutiny for DEI initiatives may continue, companies and their boards properly may pursue DEI strategies as part of their companies’ overall missions. The August 19, 2023, memo in the Harvard Law School Forum on Corporate Governance can be found here.Continue Reading DEI Initiatives Face Increased Scrutiny

I have noted for some time now in posts on this site the development of an ESG backlash, which has taken a variety of forms, including through both political action and litigation. For example, I recently noted two ESG backlash lawsuits that had been filed against major U.S. airlines. Now in the latest example of an ESG backlash lawsuit, a plaintiff shareholder has filed a securities suit against the retailing giant Target Corporation and certain of its directors and officers based on allegations that the defendants “betrayed both Target’s core customer base … and its investors by making false and misleading statements concerning Target’s Environmental, Social and Governance (ESG) and Diversity, Equity, and Inclusion (DEI) mandates that let to its disastrous children-and-family themed LGBT-Pride campaign.” A copy of the complaint in the new Target lawsuit can be found here.Continue Reading Target Hit with ESG-Backlash Securities Suit

In prior posts, I have noted the growing phenomenon of an anti-ESG backlash. The ESG backlash has taken the form of both legislation and litigation. In the latest examples of ESG backlash litigation, plaintiffs recently have filed two lawsuits against U.S.-based airlines based on the companies’ alleged actions supporting ESG-related initiatives. As discussed below, these latest lawsuits reconfirm that it is not the ESG laggards that are getting hit with ESG-related litigation; rather, the lawsuits are coming against companies that are taking ESG-supportive initiatives.Continue Reading Airlines Hit with ESG-Backlash Lawsuits

Planet Earth

Many readers may have seen that earlier this week, President Biden made his first use of his Presidential veto powers to block a Congressional measure that would have reinstated Trump-era Labor Department ban on retirement plans considering factors such as climate change, social impacts or pending lawsuits when making investment choices. However, readers may not have seen that last week, in apparent anticipation of the Presidential veto, a group of governors of 19 states announced that they had formed an alliance, led by Florida Governor Ron DeSantis, to “push back against President Biden’s environmental, social, and corporate governance agenda that is destabilizing the American economy and the global financial system.”

The 19 state governors issued a joint statement that further explained their reasoning for forming the alliance. The March 16, 2023, press release from Governor DeSantis’s office about the alliance can be found here. The March 16, 2023, joint statement of the governors can be found here. A March 21, 2023 memo from the Cadwalader law firm about the governors’ alliance can be found here. The details of the Department of Labor guidelines, the Congressional measure, and President Biden’s veto are discussed in a March 20, 2023 post on The Nickel Blog, here.Continue Reading Governors Form Alliance to Fight ESG